Positive data puts markets on a rally


The first ECB conference for 2013 saw policy makers holding on to the key interest rate at 0.75%. Mostly positive market data from Europe, saw the Euro rising by close to 1% against the Dollar which was relatively weak against most currencies.

The Spanish debt auction saw the best results with the 10 year yields going below the 5% mark. Further more, the ECB anticipates economic recovery in late 2013 with some short term weaknesses to overcome.

European indices were mixed with the Italian MIB closing 0.72% higher while the Dutch AEX increased 0.2%. The CAC40 and German DAX closed 0.39% and 0.16% lower.

The Bank of England also kept the key interest rates untouched at 0.5%.

Positive market data from China also contributed to the Euro’s rally. Investors anticipate an imminent cut in the reserve ratio for banks in China during the first quarter but inflation rates might prevent this from happening in the short term.

The Producer Price Index data which was released did not confirm an export trend as prices fell -1.90%, more than the expected -1.80%.

Japan’s Premier Shinzo Abe announced a stimulus package worth 10.2 Trillion Yen. The program focuses on disaster prevention and to encourage investment in the country. The stimulus package immediately weakened the Yen as the USDJPY rising to 89.350.

Among the Asian stocks, the Nikkei saw gains of 1.4% while the Hang Seng and the Australian ASX closed 0.46% and 0.29% lower.

From the US, unemployment continues to worry investors as the recovery in initial jobless claims missed market expectations. Companies are also expected to further layoff their employees, especially in the financial sector including Citi Group and American Express.

Jack Lew was formally vetted as the President’s choice for replacing Timothy Geithner as the US Treasury Secretary. Jack Lew was formerly President Obama’s Chief of Staff. The senate will have to approve the appointment of Jack Lew amidst objections from some members of the senate from the republican party.

US equity markets gained broadly as the earnings season is underway. The markets were optimistic on the upbeat trade numbers from China and positive comments from ECB Chief Mario Draghi. Further more, St. Louis Fed President James Bullard commented that the US economy could see strong growth in 2013 and 2014 saw the equity markets rallying higher.

The S&P500 closed 0.76% higher while the Dow Jones and the Nasdaq closed 0.60% and 0.51% higher.

The US Dollar Index was weak, retracing below the 80 region. The 10 year treasury yields was at 1.9%.